Expert: Jessica Bryan - 8/26/2005

Question
Hello

I am planning to sell my house at $459,000, but not sure what fees I should be aware of during the settlement.  As I know, there will be 2% that is $9,180 buyer agent¡¦s commission and 2.5% that is $11,475 closing fee.  I am not sure what the closing fee is for.  Also, could you please explain to me what are the steps of selling a house and when those fees will occur?  Thank you so much

P.S. I live in Maryland.

Kate  

Answer
Dear Kate;
The fees that you will incur are sometimes determined by the contract with the Buyer.  If you are representing yourselves then you will not pay a listing agent fee and will simply pay the Buyer's agent (if there is one) their fe--which is negotiable.  The closing fees to the Buyers are generally much higher than your closing fees since they pay for the points on a mortgage, any pre-paids such as homeowners association dues, taxes, and insurance that their lender may require to hold in an account for the first year.  The Sellers usually pay for the attorney to draw up a deed and lien waiver and transfer tax or tax stamps. Other than that there should be no other fees required of you.  The Buyers may ask for you to cover some of their closing costs however.  If so, that should be specified in the contract.  Often, when I write an offer to purchase I advise my Buyers to ask for a specific amount such as $2,000 in closing costs which is part of the lenders fees and maybe attorney fees, appraisal, and survey fee.  These are non-recurring costs that the lender will agree to having the Seller pay.  So...if you have agreed to those fees you could pay a good deal more at closing.  

You asked what are the steps to selling: first it is to find a buyer and settle on the terms of the sale:the price, the comission, the closing date and inspections.  Next there will be inspections done by a licensed home inspector and if anything is found (of a structural nature) to be in need of repair the Buyers may come back to you and ask for it to be fixed.  If you don't want to fix it you may have to renegotiate the price of the home or they have the right to walk away and get their earnest money back.  Once they are satisfied that the home is in good condition they get their loan approved and get a closing date confirmation from their attorney.  You will provide the closing attorney with the name of your loan servicer and the loan pay-off # so they can get the exact amount that will be needed to pay off your mortgage. You come to the closing with the deed and lien waiver and the keys. At the closing table you sign the papers and receive the remainder of the profit after commissions and fees are paid as well as the existing mortgage is paid off. (I have, of course simplified the process but basically these are the main steps.) I hope that this helps.

Good luck and best wishes.
Sincerely,
Jessica Bryan
Managing Broker
House to Home Realty Services